Filter by Tag:VAT Tax Records RTI Pensions P11D Newsletter Interest Rates HMRC Equine Employers Dividends Company Car Tax Companies House Client Area Cash Capital Gains Tax CIS Apprenticeships
Dividend Allowance replaces Dividend Tax Credit
Date: 11th March 2016
April 2016 sees significant changes to rates of tax, says Tony Croft. From April 2016, the Dividend Allowance will replace the Dividend Tax Credit, meaning you won’t have to pay tax on the first £5,000 of your dividend income, irrespective of your non-dividend income. This is a fairly generous allowance, although it does reduce your Basic Rate band by the same amount.
The rates will also change, so that you pay 7.5% on any dividend income over £5,000 within the basic rate band, 32.5% within the higher rate band, and 38.1% within the additional rate band.
There is a significant change here. Where in the past you may have had no further tax to pay because your dividend income was within the basic rate band it will now be exposed to additional personal tax.
During the course of March/early April, we will be writing to individual clients to point out what the changes will mean to them. In some circumstances, the overall tax liability on personal income will increase and a provision will need to be made for it.
If you are in any doubt about your position in relation to this issue, please talk to your usual Thomas Croft contact as soon as possible.